Movie theater ads reeling in cash

Figures show hefty 18.5% gain in revenue

In an unlikely reversal, movie theater advertising has officially shaken off the skepticism of a decade ago to become the most powerful ad vehicle outside of the Internet.

New figures just released by the Cinema Advertising Council, a trade org repping 82% of U.S. screens, show a hefty 18.5% gain in revenue to just shy of $540 million in 2007, up from $455.7 million a year earlier.

That revenue is significant for the mature, perennially product-dependent exhib biz because the vast majority of it goes directly to their coffers instead of being split with Hollywood.

For media buyers and major brands looking to cut through clutter and find a solid base of viewers in a fragmented mediascape, the data also validate the decision to look to theaters. A 2007 study by Arbitron found that a majority of frequent moviegoers recalled specific ads and also did not mind having ads before the feature.

Six to eight years ago, the cinema ad biz was still stuck in a low gear amid class-action lawsuits, studio interference and Madison Avenue indifference.

An identical rise of 18.5% was reported in both major segments, onscreen ads (which account for 92% of total revenue, or $494.6 million) and off-screen activities, such as events, lobby promos and music, revs for which hit $45.3 million.

“More advertisers are using cinema more frequently, committing ad dollars ‘upfront’ for multiple flights as cinema has proven its value and efficiency as a sustaining medium,” said Stu Ballatt, head of the CAC. “Onscreen advertising combined with off-screen marketing in the theater can, literally, double or triple the impact a brand can make on the moviegoer.”

About 74% of total revenue comes from national or regional advertisers, though Ballatt also noted local ads are a growing priority for theater owners, especially now that technology has improved.

The cinema ad biz is controlled by two dominant rivals, Screenvision and National CineMedia. Latter, spun off from Regal in 2006, is publicly traded. Screenvision is a joint venture of Thomson and ITV.